The company that makes Gibson guitars and Baldwin pianos filed for Chapter 11 bankruptcy protection early Tuesday amid what it called a "devastating" financial fall.
Nashville, Tenn.-based Gibson Brands requested court protection from its creditors, saying it had support from many of them for a deal that would allow the company to survive.
Founded in 1894, the company said it planned to continue designing, building and selling musical instruments and equipment, including other brands such as Wurlitzer, Dobro, Epiphone, KRK and Cerwin Vega.
But the company said it would kill its Gibson Innovations unit, which makes Philips-branded headphones, speakers and other electronic accessories.
Known for providing instruments to stars such as Elvis Presley, BB King, Keith Richards, Pete Townsend and Lenny Kravitz, Gibson sells more than 170,000 guitars annually in more than 80 countries, according to a court filing. The company claims market share of more than 40 percent in electric guitars above $2,000.
But sales have declined significantly, and cost-cutting efforts haven't been enough to stop the bleeding. In recent months, lenders required accelerated repayment as the company's business deteriorated.
"Over the past 12 months, we have made substantial strides through an operational restructuring," Gibson CEO Henry Juszkiewicz said in a statement, adding that Gibson will "refocus on our core business" of musical instruments, which "we believe will assure the company's long-term stability and financial health."
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Juszkiewicz owns 36 percent of the company, according to the bankruptcy petition.
To be sure, the best-laid plans of companies that file for bankruptcy often go awry in court.
A federal judge will be required to sign off on the company's plan to shed debt, which has the support of 69 percent of secured lenders on notes due in 2018.
Unsecured creditors, such as other lenders and vendors, could object to the restructuring plan and demand liquidation on the grounds that they'd be better off with the company going out of business.
Gibson's guitars include the Les Paul, SG, Flying V, Explorer, J-45 and Hummingbird.
The company sells its products in more than 3,000 places, including physical retailers and websites.
The company has long trumpeted its made-in-America guitars. Gibsons are manufactured in Nashville, Memphis and Bozeman, Mt.
Gibson's musical instruments business has more than 875 workers.